Blackberry 2006 Annual Report Download - page 74

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Research In Motion Limited
72
Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
19. Financial Instruments
Values of nancial instruments outstanding were as follows:

    
    

Cash and cash equivalents      
Available-for-sale investments     
Long-term debt       
Currency forward contracts     
February 26, 2005
Notional Carrying Estimated
Amount Amount Fair Value

Cash and cash equivalents $ — $ 610,354 $ 610,354
Available-for-sale investments — 1,069,363 1,069,363
Long-term debt — (6,727) (7,079)
Currency forward contracts 295,761 14,597 14,597
For the Company’s trade receivables, other receivables, accounts payable and accrued liabilities, the fair
values approximate their respective carrying amounts due to their short maturities. The fair value of
investments has been estimated based upon market quotes from an independent pricing service. The fair
value of foreign currency forward contracts has been estimated using market quoted rates of foreign
currencies. The fair value of long-term debt has been estimated using market quoted interest rates. The
estimates presented herein are not necessarily indicative of the amounts that RIM could realize in a
current market exchange. Changes in assumptions could have a signicant effect on the estimates.
The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its
functional currency, the U.S. dollar. The majority of the Company’s revenues in scal 2006 are transacted
in U.S. dollars. Portions of the revenues are denominated in Canadian dollars, Euros and British Pounds.
Purchases of raw materials are primarily transacted in U.S. dollars. Other expenses, consisting of the
majority of salaries, certain operating costs and all manufacturing overhead, are incurred primarily in
Canadian dollars. At March 4, 2006 approximately 5% of cash and cash equivalents, 28% of trade
receivables and 19% of accounts payable and accrued liabilities are denominated in foreign currencies
(February 26, 2005 – 2%, 42% and 22%, respectively). These foreign currencies include the Canadian
dollar, British Pound and Euro.
As part of its risk management strategy, the Company maintains net monetary asset and/or liability
balances in foreign currencies and engages in foreign currency hedging activities using derivative nancial
instruments, including forward foreign currency contracts and options. The Company does not use
derivative instruments for speculative purposes.
To hedge exposures relating to foreign currency anticipated transactions, the Company has entered into
forward contracts to sell U.S. dollars and purchase Canadian dollars. These contracts have been designated
as cash ow hedges, with the resulting changes in fair value recorded in other comprehensive income, and